“Ignorance is bliss,” or so goes the old saying. For retail business owners, though, ignorance can lead to a lot of problems and a lower bottom line. Being aware and prepared is far more lucrative for those in the retail industry.
When you’re aware of the risks facing your business, you can take steps to overcome them. This is very much the case when it comes to shrinkage in a retail business. Turning a blind eye or sweeping issues under the rug will only cause more trouble down the line.
Instead, get ahead of retail shrinkage by using any of these five methods designed to reduce it. Whether you adopt one or all five reduction methods, you’ll be giving your business a much better chance to profit and grow.
1. Invest in Better Management for Inventory
One type of retail shrinkage comes from inventory loss. In some cases, you could lose inventory because of accidental damage or destruction. Suppose a customer spills a coffee on an expensive, white sweater. You may have to cut your losses on this merchandise.
In other cases, inventory leaves your shelves in more purposeful ways. Customers might walk out with items they didn’t pay for. An employee might pretend to take out the garbage and instead leave with a bag full of perfectly good merchandise.
Investing in an inventory management system can help you reliably track your inventory so you’ll know exactly which items seem to “grow legs,” when, and how often. You’ll be able to notice discrepancies quickly, which could make it easier to spot people potentially acting dishonestly. It can also help you keep better track of damages, returns, and more. You may even be able to keep a better eye on stock levels so you can reorder at the right time and not miss out on sales.
2. Run a Loss Prevention Program
Running a loss prevention program with your employees is one of the best ways to reduce shrinkage in retail. The right training also gives them strategies to spot and prevent loss.
A good loss prevention program focuses on the consequences of acting dishonestly, emphasizing how this behavior hurts the business as a whole. It can also communicate why accountability is important and how you’ll hold employees accountable for their actions.
3. Install Security Solutions
Installing security cameras can help you both deter loss and catch those who are acting dishonestly. Install cameras in obvious areas so they’re visible. You’ll want to make sure to cover cash registers, your retail floor, your cash room, and even your back door.
4. Review Register Transactions Daily
Not all retail shrink comes from outside sources. Every business owner wants to trust their employees, but it’s likely someone will eventually act dishonestly.
You can significantly reduce your shrink rate by paying attention to register transactions. Make sure to look at all types of transactions, including voided, canceled, and deleted sales, as well as returns and discounts.
5. Invest in Cash Management Technology
The more opportunities your employees have to handle your cash, the more temptation there is for them. Take a “hands-off” approach by investing in cash management technology. Let cash counters and sorters and currency recyclers handle activities like dispensing floats, counting, and sorting. Not only will cash management technology reduce your risks, but it can also greatly increase accuracy, which will also reduce losses from human error.
Protect Your Retail Store
When it comes to protecting your company, these five tips to reduce shrinkage in retail can help. Investing in an inventory management system, implementing a loss prevention program, installing security cameras, reviewing register transactions, and investing in cash management technology can help you boost your bottom line.